Federal loans are available to help students and parents pay for college. 45.3 million borrowers have federal student loan debt. The average balance is $37,338. Source: educationdata.org, 2023 College Loans A low-interest federal loan available to undergraduate and graduate students. Direct Subsidized Loans (for undergraduates only) are based on need, and the government pays the annual interest while the student is in school. Direct Unsubsidized Loans are not based on financial need, and interest accrues while the student is in school. Repayments for Direct Loans are delayed until six months after the student leaves school. Available to parents of dependent undergraduate students as well as graduate students. The interest rate is higher than on regular Direct Loans. Parents can borrow up to the total cost of attendance minus any other aid received. Repayments and interest accrual begin after loan funds are fully disbursed, but parents may request a deferral of payments while the student is in school. Direct Loan Direct Plus Loan 1 2 Private student loans are also available, but they usually carry significantly higher interest rates and have less flexible repayment options than federal loans.